February 2019
The 10 Most Important Drug Insurance Events of 2018
Similarly to previous years, 2018 was a year rich in significant disruptions for the drug insurance industry in Canada. Here is our fourth edition of the 10 developments of the past year that have had—or will have—the greatest impact.
Canadian legislative changes
1. The development of national pharmacare
2. Ontario government’s reversal on OHIP+
3. Insurance impact of the legalization of recreational cannabis
4. Introduction of a health tax in British Columbia
Prescription drug cost reforms
5. Reduction of generic drug costs in Canada
6. Review of the patented medicine regulation process
Drug efficiency
7. Evolution of the biosimilars market in Canada
Evolving pharmacy practices
9. Negotiations between insurers and Quebec pharmacists
10. Transparency of pharmacists’ professional fees in Quebec
Provincial governments have followed the federal government’s lead and initiated discussions that have, for some, led to substantial changes to their legislative framework for various aspects of prescription drug insurance.
1. The development of national pharmacare
In February 2018, the federal government announced in its budget the creation of an Advisory Council on the Implementation of National Pharmacare. In a discussion paper published in June 2018, the council identified three key issues:
- Canadians do not have equal access to prescription drugs
- Prescription drug costs are rising sharply
- An increasing number of high-cost drugs are entering the market
The Advisory Council retained three options for the implementation of a national plan:
- Adopting a universal plan covering prescription drugs for all Canadians
- Implementing a safety net for Canadians requiring the use of high-cost drugs
- Maintaining the public-private mix with public funding to provide all Canadians with access to prescription drugs
The Advisory Council’s recommendations are expected this spring. Normandin Beaudry took part in various discussion platforms on this topic and further explains its position on the issue in a White Paper.
2. Ontario government’s reversal on OHIP+
On June 30, 2018, Ontario’s new Health Minister announced new developments to OHIP+. This was a reversal for the Ontario government, which, since January 1, 2018, had been providing a universal drug insurance plan to all Ontarians under age 25. The first details of this announcement were unveiled in late December and on January 2, 2019, the government officially announced the details of the OHIP+ reform.
This means that starting March 2019, Ontarians under the age of 25 will no longer be covered by OHIP+. This universal plan will be converted to a public plan providing coverage to Ontarians under the age of 25 who do not have access to private insurance.
Read our January 15, 2019 bulletin for more details.
3. Insurance impacts of the legalization of recreational cannabis
On October 17, 2018, the Canadian government legalized recreational cannabis. Despite a clear distinction between recreational cannabis and medical cannabis, this new legislation revived the debate for insurers and plan sponsors on the insurance coverage of medical cannabis, which has been legal in Canada since 2001.
The recreational cannabis legalization process, which spurred extensive media coverage, prompted insurers to clarify their position on the eligibility of medical cannabis in group insurance plans as well as on the medicinal benefits for specific medical conditions. As a result, insurers adjusted their stance and reviewed their plan coverage for medical cannabis by adding an optional coverage (ranging from $2,000 to $6,000 per year, per patient), subject to a strict pre-authorization process.
To date, few organizations have added this optional coverage to their plan. Our article on the renewed reflection on medical cannabis provides further details on the insurers’ offer and the impact on private group insurance plans.
4. Introduction of a health tax in British Columbia
On January 1, 2018, Medical Services Plan (MSP) premiums paid by all British Columbian adults were cut in half. As announced in the provincial budget, these premiums will be completely eliminated by January 1, 2020. Since January 1, 2019, a health tax has been added to the employers’ payroll taxes with an annual payroll greater than $500,000 to compensate for the gap caused by the premium reduction. This health tax could represent up to 1.95% of the annual payroll representing a non-negligible social burden.
This represents a change in the funding of BC’s public plan rather than a change in reimbursement provisions, meaning that this new health tax will not affect private plan coverage. For more details, read our bulletin on the introduction of a health tax in BC.
National reforms to reduce prescription drug costs
5. Lowering generic drug costs in Canada
On April 1, 2018, the Canadian Generic Pharmaceutical Association (CGPA) and the pan-Canadian Pharmaceutical Alliance (pCPA) announced an initiative to reduce the prices of nearly 70 of the most commonly prescribed drugs in Canada by 25% to 40%. This initiative is expected to extend over the next five years.
The majority of these drugs are among the most commonly prescribed drugs in Canada and are dispensed in their generic form. These drugs are mainly maintenance drugs used to treat high blood pressure, high cholesterol and depression. These savings have a direct impact on provincial public plans. Historically, a reduction in generic prescription drugs has not had the same impact on private drug insurance plans. Moving forward, it will be interesting to see how this might affect the experience of private plans.
6. Review of the patented medicine regulation process
The Patented Medicine Prices Review Board (PMPRB) is a government body whose mission is to regulate the prices of patented medicines. Prices are determined by evaluating the cost of the same medication in seven industrialized countries.
In 2018, the PMPRB announced that it intended to modify the comparative market to include 12 countries and to exclude the U.S. from the comparative basis. Considering that drug prices in the U.S. are the highest in the world according to a recent analysis by the PMPRB, this adjustment would help reduce prescription drugs costs in Canada.
Some market players, including pharmaceutical companies, are currently exerting pressure on the proposed PMPRB guideline reform to prevent a significant drop in prescription drug costs in Canada. The government is still in the process of examining modifications to the guidelines and will eventually take position on the issue.
Concerted research and development efforts to increase the socioeconomic efficiency of prescription drugs.
7. Evolution of the biosimilars market in Canada
The number of biosimilars available in Canada rose once again in 2018. With the arrival of a new generation of biosimilars comes a significant downward pressure on the cost of these expensive medications. Several other biosimilars should enter the market in coming years.
Many public provincial plans were forerunners in promoting the use of these biosimilars for new patients. We anticipate that the coming year might be the first one where switches from reference to biosimilar drugs will come into effect based on criteria that have yet to be determined. These switches have already occurred nationally in some European countries. Private plans will have new opportunities to integrate measures promoting biosimilars should public plans adopt the switches.
8. Rise of pharmacogenetics
Pharmacogenetics is the study of responses to drugs based on individual DNA. Research has shown that we can now assess the optimal effects of a drug molecule per patient thanks to pharmacogenetic testing. Some of the many benefits of this field include faster patient stabilization, improved treatment adherence as well as fewer prescribed medications, thereby improving the quality of life of patients.
Treatment based on pharmacogenetic testing has shown to be quite effective in cases of depression, ADHD, heart problems and diabetes. Some insurers have begun to reimburse the cost of these tests, under certain conditions.
Update on Quebec pharmacies’ practices
9. Negotiations between insurers and Quebec pharmacists
2018 marked a full year of negotiations between insurers and the Association québécoise des pharmaciens propriétaires (AQPP). Private plan sponsors—which are on the lookout for opportunities to better control costs and align their standards with those of other provinces—have high hopes for the outcome of these negotiations.
Stay tuned! Results should follow shortly.
10. Transparency of pharmacists’ professional fees in Quebec
The transparency of pharmacists’ professional fees, which has been mandatory since September 2017, was the first step towards raising awareness about the cost of prescription drugs. One year later, it has become clear that this will not be enough. Interest has waned in 2018 despite media attention, as shown by the lack of questions from insured individuals to plan sponsors and insurers. It seems that plan sponsors will have to renew their efforts to encourage insured individuals to pay closer attention to their detailed pharmacy invoice so that they may better understand it and make sound decisions.
While these events were significant in 2018, some conclusions will be even more so in 2019. Recent years have shown that the prescription drug insurance market is undergoing a transformation, which is sure to affect both the public and private plans.
To weather these changes, our personalized support can help you better understand the current or future impacts of these changes on your drug insurance plans. Contact your Normandin Beaudry consultant or email us.